DISH Network Corporation (DISH) Q1 2023 Earnings Call Transcript

DISH Network Corporation (NASDAQ:DISH) Q1 2023 Earnings Call dated May. 08, 2023.

Corporate Participants:

Timothy Messner — Executive Vice President & General Counsel

Erik Carlson — Chief Executive Officer

Paul Orban — Chief Financial Officer

Charlie Ergen — Chairman

Dave Mayo — Executive Vice President, Network Development

John Swieringa — President and Chief Operating Officer, DISH Wireles

Analysts:

Marlane Pereiro — Bank of America Securities — Analyst

Ric Prentiss — Raymond James — Analyst

Michael Rollins — Citi — Analyst

Unidentified Participant — — Analyst

Walter Piecyk — LightShed — Analyst

Doug Mitchelson — Credit Suisse — Analyst

Jonathan Chaplin — New Street — Analyst

Kannan Venkateshwar — Barclays — Analyst

Craig Moffett — SVB MoffettNathanson’s — Analyst

Scott Moritz — Bloomberg — Analyst

Paul Kirby — TR Daily — Analyst

Presentation:

Operator

Good day and welcome to the DISH Network Corporation First Quarter 2023 Earnings Conference Call. Today’s conference is being recorded.

At this time. I would like to turn the conference over to Tim Messner. Please go ahead.

Timothy Messner — Executive Vice President & General Counsel

All right. Thanks, Rachel, and good morning everyone. Thanks for joining us. On the call today, we have Charlie Ergen, our Chairman; Erik Carlson, our CEO; Paul Orban, our CFO, on the wireless side, we have John Swieringa, President and CEO of wireless and Dave Mayo, EVP of network development. Before we start, I need to remind you of our safe harbors as usual.

During this call, we may make forward-looking statements which are subject to risks, uncertainties and other factors that could cause our actual results to differ materially from historical results or from our forecasts. We see no responsibility for updating forward-looking statements. For more information on factors that may affect our future results, please refer to our SEC filings.

And with that, I’d like to turn it over to Eric for opening remarks.

Erik Carlson — Chief Executive Officer

Thank you, Tim, and welcome, everyone. And thank you for being here today. I’m going to begin with a few brief comments before opening it up to your questions. As most of you are aware, it’s been a busy few months some planned and some not. On our last earnings call, we announced we had experienced a network outage that affected our incident response and business continuity plans. Once we determine the outage was due to the cyber security incident we promptly notify the appropriate law enforcement authorities. On February 28th, we further disclosed that certain data had been extracted from our IT systems as part of the incident.

Our investigation, to the extent that the incident is now substantially complete, and we have determined that our customer databases, we’re not accessed in this incident. However, what we have confirmed that certain employee-related records and a limited number of other records containing personal information we’re among the data extracted. We’ve taken steps to protect the affected records and personal information and we have received confirmation that the extracted data has been deleted, while we have no evidence this data has been misused, we have started the process of notifying individuals whose data was extracted. We restored the systems affected by the cyber security incident, our websites, customer care functions, self-service applications and payment systems are operational and have been since March. Our customer care operations are up and running and service times have normalized.

Our DISH TV, Sling TV, Boost Mobile and wireless services, all remained up and running throughout the duration of the incident. We sincerely regret the inconvenience to our customers and team members, and certainly appreciate their patience while we work to restore systems and return our customer care operations to normal.

Data security is extremely important to us. Our team, including third-party cyber security experts have been working to enhance our cyber defenses and overall security posture. We’ve upgraded our endpoint detection and response system and we’ve taken other measures to fairly further secure our data and systems. We’ve also refined and will continuously improve our business continuity and system restoration processes. Now with respect to the financial impact of the incident, we disclosed in our 10-Q today that we incurred about $30 million of expenses, mainly related related to remediation, additional customer support and consulting an IT costs. This amount is included in cost-of-sales in our financial statements.

We also disclosed that the outages related to the incident negatively impacted our disconnects and churn for DISH TV. The outages did not materially affect our Boost Mobile or Sling TV subscribers. During the incident, we undertook extensive efforts to support and protect our customers and employees, and to further enhance our cyber security practices. Due the commendable efforts by our team at DISH, we do not expect any additional material future costs or further impacts to our subscriber base from the incident. Look, I want to thank our customers, employees, partners, suppliers and vendors for their support, patients and understanding.

And with that, I’m going to hand it back to the operator to start taking questions from the analyst community. Operator, please open the phone lines.

Questions and Answers:

Operator

Thank you. [Operator Instructions]. Please state your name and affiliation before posing your question. [Operator Instructions]. Our first question comes from the line of David Barden with Bank of America Securities. Please go ahead.

Marlane Pereiro — Bank of America Securities — Analyst

Hi, this is Marlane Pereiro, on for David Barden at Bank of America Securities. Wanted to start-off the questions regarding capex, can you talk about the run-rate capex, post the June 2023 build-out? And then if possible, provide what potentially could be a new run-rate? When that run-rate would start? And then potentially when capex would ramp again heading into ’25 through build-out requirements?

Paul Orban — Chief Financial Officer

Hi, this is Paul, I’ll jump-in. That’s a good question. I think we’ll come in slightly lower than last year’s capex, but unlike last year, it will be front-end loaded with the dropping off after we hit our June milestone. But other than giving future capex guidance, we’re not going to — we don’t provide that.

Marlane Pereiro — Bank of America Securities — Analyst

Got it, [Speech Overlap]

Charlie Ergen — Chairman

This is Charlie. I think — I think, I may add a little more color to that. I think that obviously, we had two back-to-back milestones in ’22 and ’23, with the vast majority the population — 70% population. So you can look for us to to be able to — two things that we really would do from a capex perspective; One is, we can go — we certainly will be able to take a little bit of a pause in terms of some of the new markets, but we will continue some capex to densify the current markets that we have once we’re with customers, you always find you have some gaps and things, so we will have some capex on current markets, but future markets, we’ll be able to take a bit of a pause, until the — late 2024 or early 2025 timeframe.

Marlane Pereiro — Bank of America Securities — Analyst

Got it and then as you build-out the licenses to meet the mid ’23 requirements. Is it possible to give any update on the build of the 600 megahertz that you might be building out concurrently with the other licenses?

Dave Mayo — Executive Vice President, Network Development

So, yeah, hi, this is Dave Mayo, we’ve started construction on about 18,000 sites as of the end of the first quarter. It will take approximately 16,000 sites for us to meet the objective. And those sites will have to be fully fibered and powered and we’re well on our way to achieving that.

Charlie Ergen — Chairman

Yeah. I think on the second part of that question. In the 700 and The 700 megahertz is in — are — is in those numbers, but additional six more — excuse me 600 is in those numbers, but in terms of new cities for 600 that’s something that we’ll take kind of case-by-case basis. As you find that you have more roaming charges and you could do it by putting something on your own network, you’ll make that — you’ll built for success, ultimately you build for the FCC. [Speech Overlap] in addition to that.

Dave Mayo — Executive Vice President, Network Development

Yeah. we’re well on our way to meeting the 70%, with respect to the 600 megahertz licenses.

Marlane Pereiro — Bank of America Securities — Analyst

Got it. Thank you. And then once you do hit the mid-June requirements, is it possible to give us a sense of how much this will make in terms of business operations in your go market — go-to-market strategy, it was 20% last year, 70% this year, so just trying to think about the impact it could have on the business now with a much broader offering.

John Swieringa — President and Chief Operating Officer, DISH Wireles

Good morning. It’s john Swieringa, I’ll take that part of the question. So as the end of the first quarters, we’re now serving 70 million people with commercial bonner or DISH 5G network through Boost Mobile. That’s a little bit more than 50 cities. So as we build out 5G broadband, we then come in and optimize the network, densify it, and move those markets towards commercial launch. So we would expect that by the end of the year, we’ll be serving the majority of the U.S. population with commercial bonner. And loading retail customers on to that network, we’re making steady progress with getting Avantor advanced 70 devices into our distribution and our supply-chain and we expect that to pick-up as the year continues.

Marlane Pereiro — Bank of America Securities — Analyst

Got it and then just turning to your cost-of-capital, just given the current cost of capitals, can you walk us through maybe what’s some of the levers are that you could have pull — could pull to address one upcoming maturities and two other funding needs, including additional capex.

Charlie Ergen — Chairman

Hi. This is Charlie. Well, obviously, we focus on our maturities with obviously the next one coming up in March of next year. So for a billion dollars and that’s a convert. So we look at the levers there, and so that needs to be — dealt with[Phonetics], ideally would be equity or equity-like In terms of nature because it’s kind of equity-like today. And we think there’s a number of levers, obviously, we’re liquidity poor in the sense that the market is probably from a debt perspective just really aren’t open to us and but we are asset-rich, and so we look at all the different levers we have. I’m not going to give you those on the call. But over the years, we’ve been a good steward of capital and we think there’s — there are many things that we can do and some that — that we can do to meet those maturities. And so, we’re focused on two things; one is the operations of our business and obviously, to the extent that we operate our business efficiently, start putting people on our network, then start competing a bit stronger way with postpaid, which is a more profitable customer on our network. Liquidity, becomes a little bit easier to attack, because people will see the growth and the profitability of what you’re doing, if you’re not able to do that, that’s a different story.

And obviously we have to wait-and-see where the markets are. Next year. What that — means is even the government having a debt crisis. So obviously, there is market — there is money available today out there in the marketplace. There is a fair amount of capital in the marketplace. We hope that doesn’t change, but, we’re like everybody else, we don’t control. where the economy goes.

Marlane Pereiro — Bank of America Securities — Analyst

Thank you. And then one final one, if. I could. Can you provide any update on the 800 megahertz spectrum auction. Is there anything there that you could share, in terms of timing or potentially what you’ll do with?

Charlie Ergen — Chairman

I think I can repeat what. But the CEO of T-Mobile said, we did get an extension of 60 days on that, and at a minimum, we think it’s 600 megahertz — 800 megahertz is extremely important for us to be able to compete. And so obviously, capital wise we’re challenge to be able to do that transaction today, but we think that there a ways that we can make that transaction happen. And we think it would be from a competitive — competitor point-of-view that’s important low-band particularly out like spectrum.

Marlane Pereiro — Bank of America Securities — Analyst

Great. I’ll leave it there and pass it on.

Operator

Thank you. Our next question comes from the line of Ric Prentiss with Raymond James. Please go ahead.

Ric Prentiss — Raymond James — Analyst

Hi, guys, can you hear me?

Erik Carlson — Chief Executive Officer

We can Ric.

Ric Prentiss — Raymond James — Analyst

Okay. And follow-up on that, if. I could, with the 800 megahertz spectrum, are you required — is there a regulatory requirements to build that? Is it possible to resell it? Also spectrum securitization market, typically what mentioned about 35% – 40% of value. Just wondering if you could elaborate a little bit on what the requirements are with that 800?

Charlie Ergen — Chairman

The requirement is demand is to build it, but we have — we built it. So part of what Dave and his team have done is to build 800 megahertz and and. It’s my understanding that T-Mobile, for the — as turn that network down for the most part, there’s still some statutory requirements that they keep a couple of towers up, but they pretty much turned that network down, so we basically have a functioning 800 megahertz from a retransmission point-of-view be at 70% of the population in a few week. So, we wouldn’t have a regulatory problem for meeting the commitment for build out.

Ric Prentiss — Raymond James — Analyst

All right. [Speech Overlap]

Charlie Ergen — Chairman

If for some reason — if for some reason we weren’t able to exercise the option, we would have a penalty of $72 million to T-Mobile, that’s the other piece of it.

Ric Prentiss — Raymond James — Analyst

Were you able to take over, any of those old Nextel antenna sites line so they help you with the transmission?

Charlie Ergen — Chairman

We did not take-over. [Speech Overlap] We take taken — we’ve taken some sites, Ric, but not not so. I wouldn’t call it a significant number, but it’s not the next cell radio gear that we would use the 800 megahertz frequencies are in the radios that we’ve deployed the low band radios that we’ve deployed. But I’ll put that in perspective, if you were if you were if you were to do a new-build of 800 megahertz, you’re talking several billion dollars to do — if you were to go out on your own and build 800 megahertz to the extent that we have, that would certainly be a — that would potentially be a multi-billion dollar build, it will cost you almost much to builders as we’ve had to build for all our frequencies.

Ric Prentiss — Raymond James — Analyst

And last one, Charlie.

Charlie Ergen — Chairman

You’ll have to — I’ll leave it up to Analyst on here to figure out that’s positive or negative, but. I think that’s a big positive for an asset we have that people just don’t recognize.

Ric Prentiss — Raymond James — Analyst

[Speech Overlap] Last one for me is on the private networks side. I think you said several times that the best use of the network might be for wholesale business enterprise kind private network type applications. Update us as far as what you’re seeing in the marketplace? I know it’s a long sales cycle. How is the team performing there? What are the hurdles in pulling that revenue stream? And are there any opportunities for financing with potential strategic partners in that area?

Charlie Ergen — Chairman

I think you’re talking about the enterprise side of the business.

Ric Prentiss — Raymond James — Analyst

Exactly, Yes.

Charlie Ergen — Chairman

Yeah, we haven’t made substantial progress in terms of the enterprise business in terms of announcements, but behind the scenes obviously there really — and you mentioned that a couple of ways that we would approach the market. One would be, we’d actually build it out, and lease it which would take capex, that obviously is a bit less attractive to us. The second is, we would just pay for it from the get-go, so it’s cash-positive from day-one. And the third is that some of our — some of our partners in our build, whether it be Cisco or Dell or AWS come to mind, where they already have a big enterprise business, that they just add our spectrum into their thinking about how they would design private networks. And at that point, we’d be we would be at more of a wholesale provider of spectrum. So any of those three things are possibilities of how you would go ahead and build an enterprise business, but. It’s going to — it’s gonna be a huge market for all the players. I just think we’re — I think we’re a little bit better positioned, because I think the kind of network we have is the kind of network that companies when they really become a mission about what a private network can do for you and what it should do for you. The architecture of what we have is just — is just without the legacy. It’s just a better — if you’re going to build a new, you should build it right.

Ric Prentiss — Raymond James — Analyst

Any idea when we deliver it formally announced, so we can see it on our side of the fence?

Charlie Ergen — Chairman

Don’t have a timeframe for you. I mean, we said before that we think you’ll see as a 2024 event for us.

Ric Prentiss — Raymond James — Analyst

Great, thanks a lot guys.

Operator

Your next question comes from the line of Michael Rollins with Citi. Please go ahead.

Michael Rollins — Citi — Analyst

Thanks. Couple of questions, the first one is, I’m just reading the 10-Q this morning. There is a comment in there, that DISH plans to implement one or more of the following options. Raise additional capital, pursue strategic transactions and/or advance additional cost-reduction initiatives. Just curious if you can unpack that a little bit more? And what investors should expect over the next number of months from that?

Charlie Ergen — Chairman

Well I mean, I. I think we’re good stewards of capital and we obviously realized that we’re more of a — right now we’re more of a liquidity story than anything in the market and obviously we have to address that. And, I think, there’s two-ways. I don’t know what else I can say about the options out there. But, obviously, the first thing we do is, focus and I’ve really focused the team on executing to build the best network in the world and enter the postpaid business, which is more profitable, and to make sure we get more devices that we can put on our network. Because that makes the liquidity that much easier, because obviously you’re proving you can compete and we really haven’t proven that yet. So, that’s kind of, number-one.

The second thing is that the to meet our milestone with the FCC, we just have to do that. And the third thing which is maybe a bit more nuance for people on this call, but we’ve been on the TSA agreement with T-Mobile since inception which is — which is basically our billing and provisioning and our back-office functions and we have to be off of that by the end of this quarter. So, those are big things that we need — that we need to do and if we do that then then we’re successful with that, then you got — you start to see the growth that everybody has been hoping for and expecting. Probably a year-earlier than this and then, then that obviously helps you in your — in your liquidity side of it, because you’re showing you can compete.

John, there’s one other thing we need do this quarter, which we actually have done. Well, there’s two things; One was to get the cyber security behind us and that was a massive effort and I wouldn’t say it was record time based on, but certainly for us, it was, I think, right up there best-in class and how you recover from a incident. And a lot of real solid effort in our team and it gives you a lot of confidence going-forward that your team can when under pressure can operate and the other part, maybe John can talk about.

John Swieringa — President and Chief Operating Officer, DISH Wireles

Well, there’s been a lot of focus on getting Boost Infinite ready to go and we’ve made a lot of progress there. You’ll see us ramping-up marketing later in the year, as well as distribution and then one of the things, big things there, that’s been a focus for us is.bringing the iPhone to Boost Infinite and you’ll see it come later this year. [Indecipherable] they’re across the teams to make sure we’re ready to go in postpaid.

Charlie Ergen — Chairman

Yeah, and. I think that iPhone is important because it’s obviously a big part of the market-share out there and. I think it would be very difficult to be successful in the postpaid business, without it. And so we’re pleased that we have — that we have — that we will be able to bring the iPhone to the market, actually, within the next few months. So we’ve done a couple of things, already this quarter that we needed to do and we got two more things to do, and then. I think we get to go a bit more on offense, then it’s been a little bit frustrating to play defense as long as we have.

Michael Rollins — Citi — Analyst

And then just shifting gears to the video side. I also read that you entered into a contract to build and launch another satellite. Can you share a little bit more details on the cost and just the thoughts around continuing with the satellite side if there is an opportunity at some point to maybe take these customers and leverage the Sling product and accelerating migration to streaming?

Erik Carlson — Chief Executive Officer

Yeah, Michael, this is Eric, I’ll take that and maybe Charlie has a few comments. But we did enter into an agreement to build that what we would call EchoStar 25. It’s our 25th satellite, and we entered into that agreement with Maxar. We fly Maxar satellites today, and so we’re — its satellite that we’re familiar with. Obviously, as we’ve been talking about on the call for quite some time, from a DISH TV perspective, we’ve really been focused on adding profitable subscribers and in rural America. And we’ve had some success there and we’ve had decent success in retaining some of those customers. And so as our fleet continues to age, we’re in a position where we need to — add a satellite in order for us to continue to operate the service with appropriate backups within the latter half of this decade. So that satellite is under-construction now, we under contract with Maxar and we would expect to launch that somewhere in the neighborhood of 2020…

Unidentified Participant — — Analyst

26.

Erik Carlson — Chief Executive Officer

2026.

Michael Rollins — Citi — Analyst

Thanks.

Erik Carlson — Chief Executive Officer

[Speech Overlap] We don’t think the DBS business has gone away, it’s still a –it’s still a preferred choice for a lot of Americans in terms of an efficient way to watch TV and obviously, there has been — obviously, we’re able to add apps and things to the set-top box for a seamless experience. So really good business going away, we just want to make sure that that we have the right facilities in-place for our customers and — to some extent, some of these satellites — you have to have a satellite for insurance — insurerance purposes too. So that’s the reason.

Michael Rollins — Citi — Analyst

Is there a rough cost that we should just keep in mind for this?

Charlie Ergen — Chairman

We don’t disclose that, but if you take a look at the capital commitments footnote in the queue. It’s included in there.

Erik Carlson — Chief Executive Officer

So what is it. We don’t make them read, just how tell them what it is —

Charlie Ergen — Chairman

We don’t disclose [Speech Overlap] in the total

Erik Carlson — Chief Executive Officer

Oh!, it’s in the total, okay.

Michael Rollins — Citi — Analyst

Thanks.

Operator

Our next question comes from the line of Walter Piecyk with LightShed. Please go ahead.

Walter Piecyk — LightShed — Analyst

Thanks. Charlie, when you look at the sub losses in DBS and and Boost, what would they have been if you hadn’t had the cyber security event? And then similarly, to the extent there wasn’t collected revenue, how do you account for that, is it show up in ARPU and then like a receivable that gets written-off as you just not reported in revenue? And then kind of a third-part, the same question which is, what’s been the impact, I know you said as of March. It’s been — the systems have been repaired, but given the impact that had on customers, What have you seen in April and early May in terms of any lingering impacts to subscriber churn or usage or anything?

Charlie Ergen — Chairman

Let’s unpack that, probably a couple of different people here to answer that. I think the Boost in early quick, but not a material impact on Boost Mobile. We’re in a situation, while as you might expect, — we realized we’re entering the post-paid business now as we bring up our network. And postpaid customers, just a lot more profitable than prepaid customer so. If you have limited capital you’re going to spend your capital on the most profitable customers and so we haven’t been perhaps as aggressive in Boost is as — but just knowing that we get better things coming better economics coming so a dollar spent today that makes a small return you’re better-off waiting. So next quarter to spend that money, where you have a much better return at least that’s our theory. And then for Boost Mobile, we also know that there is another benefit of putting those people on our network and that’s starting to happen now two. So that’s — I wouldn’t read too much into Boost as it relates to the accounting question about the Ad revenue, you can take that — Can you take that Paul?

Paul Orban — Chief Financial Officer

Yeah, I’ll jump-in. This is Paul. The revenue impact was really immaterial. So you — and you are seeing it immaterial amount show-up in ARPU, to answer your question.

Erik Carlson — Chief Executive Officer

[Speech Overlap] Walter this is Erik, may be [Speech Overlap]…

Walter Piecyk — LightShed — Analyst

How is that possible? Because. I mean, if you weren’t able to collect revenue from customers and there’s reports that people have like go to stores and bring cash to stores, how is that possible? Like did you go back and people [Speech Overlap] able to collect [Speech Overlap] you did collect.

Charlie Ergen — Chairman

A lot of –a lot of the pressure now is exaggerated. It’s just really hard to okay. It’s really hard to comment on every exaggeration that’s out there, but. I think it’s a case that — I think the more cases maybe you didn’t collect a late fee or something like that. I think there’s — I think there’s a little bit of that maybe, Paul you know maybe…

Paul Orban — Chief Financial Officer

Yeah. I know that we are up and running, collecting all amounts by the end-of-the quarter. So that did get all caught up. So you would have seen it answer your specific question, would have been sitting on AR, but as you can see our AR balances are down from year end, but there might we might have waived the late fee — you probably a little down– a little down on the margin because you waived delayed fee, are you extended somebody three more days than you would have, because you know, you’d be able to collect — there’s some stuff around the margin there well, but nothing that material.

Walter you had third-part of the question.

Erik Carlson — Chief Executive Officer

Yeah. I mean, Walter — I mean, this is Eric, just to add a little bit more color. I mean, obviously, my opening statement, we talked a little bit about it, but. On the DISH side of the business, that’s where most of the impact was really felt, right, the legacy —

Charlie Ergen — Chairman

You might explain why that was.

Erik Carlson — Chief Executive Officer

Sure. Legacy infrastructure, as you can imagine, we’ve talked about it here, we definitely modernized kind of our tools and staff associated with Sling. Obviously, one of the TSA for some of the business through T-Mobile for Boost, and then obviously we’re building out our new digital operator platform for our new Boost and Boost Infinite businesses. And so, the modern architecture really wasn’t as impacted as much, right. We have different principles cloud based etc., but — So when you think about DISH and the legacy side of the business, that’s where the impact happened and quite frankly, we’ve been given award-winning customer service. We talked about our JD Power Aawards here, which are five in a row and we’re quite proud of them and so quite frankly, we just didn’t live up to the expectation. And so there were long hold times and we weren’t able to process payments and DISH, I mean, obviously, we’re in a postpaid billing cycle. And so, as Paul mentioned, we caught up on some of that. So there might have been a late fee here or there, which benefits the customer, but in some cases obviously we weren’t able to answer a phone call or answer customer issue with any technical issue and they may have disconnected. And you’re seeing that In the India, in the Q1 numbers, but essentially we put that past us. Like I said in the opening remarks, Boost and Sling, not really materially affected DISH on the legacy side of the businesses where we had the impact and that’s generally behind us now.

And just because, I know — the way you guys are to answer your question, well two things have happened on the on the DBS side of the business, which is; One is we had elevated churn, but the second thing is in Indian market, I mean, we didn’t make sense to go out and try to get, so we had lower gross adds and we had higher churn. We would expect obviously that we return with the outage behind us more normal run-rate then to more normal run-rates. And that’s what you’ve seen thus far in the first month of the quarter, but, there high.

Charlie Ergen — Chairman

I don’t think I can give you accurate. I don’t know. Thanks for asking question again, we don’t give guidance, but. I think we back that we will return to operation, how about that. That’s fine. So let me just do one a different one. Mind — you hit the 70% or whatever it is. I don’t think the FCC has an obligation to do anything, but clearly. It’s going to help you in terms of raising capital and becoming the fourth competitor. The market, yada, yada, yada like have they, given you any indication that when you’re done you submit whatever you got to submit In terms of engineering studies that they’re going to give you some formal stamp or is it going to be normal standard or normal procedure, which is like they don’t really have to say anything. Yeah. I think my. It would be very helpful if they would they would give some indication to the market. They did not do that with the 20%. It would have it would be helpful. It’s one of the things we don’t control which is which. The regulation and the government and so forth. Probably the more frustrating things, because I think everything that we can control. We just work really-really hard. To be successful at. And we’ve done that for 40 something years, right, but the. From a regulatory point-of-view, as an example. My congratulations to space X, but there is a 12 gigahertz study that was out there that we came on the shorter end of that stake SpaceX was allocated to spectrum and we were not able to even though we paid at auction for that spectrum, we weren’t able access spectrum for mobility. So you’re a bit of a losing streak there, but we’ve had — we’ve been on both sides of that and I hope that. It be helpful, but. I don’t think we should expect that the FCC’s will stay.

Walter Piecyk — LightShed — Analyst

Anything, in-part,

Charlie Ergen — Chairman

Because will take — they’re going to have to do their study to verify our team will certify, under penalties of perjury, that we’ve made it. But they have to certify that themselves, so. I mean, which they showed Do you think they’re going [Speech Overlap] take them that — will take them some time. So I think from an expectation point-of-view. I don’t think anybody should expect that the FCC is going to sometime in 2023 is going to say. This has made their build-out requirement, but we will be certified the extent we do, we will certify that underpin perjury. So we take that [Speech Overlap]

Walter Piecyk — LightShed — Analyst

All inhibit. Did that all inhibit your ability to reduce capex to the extent that like, let’s say, hey, you believe you hit the 70% you pulled back on capex, and then T-Mobile or whatever and they’re Reg people are like look at Charlie cutting capex and training at the FCC to hold your feet further to the fire or do you think these are two different things, and you shouldn’t have to continue to spend, which is unrelated to hitting that milestone with the FCC?

Charlie Ergen — Chairman

No I don’t think we’re — first of all, you can expect our competition to always go to the FCC, we were hoarders, we were speculators, none of that was true. But when you got three-four companies coming in and saying the same thing. That punches we don’t quite punch above our weight versus three or four people at the FCC, so. You can expect that there will certainly be a lot of, you’re going to hear about ORAN and ORAN’s three years ago ORAN didn’t work and then, well maybe word — and then it was like additional — maybe it work additional never make it work and now it will be well — well, maybe, DISH made it work, but it’s still, but decade away, so you’re always going to have that noise from people who aren’t doing it. But. I don’t think that we’re required to continue to spend on capex, once we believe we’ve made our milestone, with the exception of the thirrd milestone which is — we’ll have to continue, which we will a little bit continue ramp-up in late ’24 and early ’25.

Walter Piecyk — LightShed — Analyst

I understand. Thank you.

Operator

Our next question comes from the line of Doug Mitchelson with Credit Suisse. Please go ahead.

Doug Mitchelson — Credit Suisse — Analyst

Thanks so much. I think two questions. I’m curious. If you’re willing to share what percent or maybe ballpark, what percent of Boost traffic is running on your own network at this point versus T-Mobile or AT&T’s network. And, Charlie, we’ve booked around it a little bit. So, fair to figure out how to ask the question. The most constructive way, but my experience with you historically has been pretty conservative approach to operating the company, but the markets obviously think you’re flying pretty close to the sun, on your capital structure and. I guess I’m just wondering if you feel like you’re in a pretty conservative position or if or if you sort of sympathize with the market’s views that things are pretty tight here? Thanks.

Charlie Ergen — Chairman

Yeah. I would say — I would say that. I do think we operate pretty conservative, but. I do think the markets had historical rate changes in the last year. So that certainly has pushed us more into that purchase closer to the sun but not to the sun. So we have a narrow — look we have a narrow window of opportunity here. We have an — with narrow window to to perform and execute and address our capital structure. So we have to do a lot of things, right. We have a small margin of Air, but it’s all doable. It’s not a place that’s unfamiliar to us, right. So we started in 1980 I think mortgages were 15%. I mean, the capital markets were much worse than they are today, we started the business from scratch with no money, So a very little capital. So we had a merger denied with DIRECTV by the Just department, we were — and that said we had a very narrow window back then. So we’ve been there before, and again, the things that would worry me would be to the markets get worse. And where are they next year. We don’t know that for sure, and obviously from a regulatory point of view, there’s obviously a lot of things from a regulatory point-of-view that we have or continue to have in front of the regulators and how did they rule in those things, we haven’t –we didn’t do very well on the CDMA shut-off which was pretty bad. We haven’t done — we didn’t do very well in the DE litigation. We haven’t done very well on some things. But my experiences, you don’t — you don’t always — you win some, you lose some. We’ve been on both sides of it but to loose is — you don’t have a losing streak forever. And so I’m hopeful that, that will be a positive, but we’ll see.

But again, we focus on, we focus on the window of opportunity we have, control the things we can control and we have a good — we have a path. And it’s not evident that people on this call, but we have a path and we have to execute on that and hope that nothing gets any worse in the marketplace.

Doug Mitchelson — Credit Suisse — Analyst

Got it. And then on the Boost traffic?

Charlie Ergen — Chairman

We don’t disclose that, but it’s not — it’s not a material amount yet, in-part, because we only have five — we only have five — maybe John can talk, we have five — we only have five handsets now that have Band 70, which is the which is a major part of our spectrum.

John Swieringa — President and Chief Operating Officer, DISH Wireles

Yeah, as Charlie, says, it is early days. We’re going to continue to have a growing portfolio of products, they’re going to be available for Boost Mobile and Boost infinite on our own network, including iPhone. We’re really just getting radios support that business from a supply-chain perspective, that works up and ready to roll-in, those markets and we’re gonna be loading customers and then once we clear the 70% and we’re on-track to do that, we’ll then start optimizing those markets and loading on our network there as well.

Doug Mitchelson — Credit Suisse — Analyst

Yeah.

John Swieringa — President and Chief Operating Officer, DISH Wireles

So we’re ramping this year.

Charlie Ergen — Chairman

And we should make one distinction realize our realized one of the things that we’ve done is built a network with voice over new radio. So we’re they only the only person in United States, really in the world other the Chinese partly that does that at-scale. So that’s the new way to do — to do voice and. Our goal is to have the vast majority of — vast majority of the population be able to utilize our network with Bonner by year end. And obviously, to extent that you do that, then the next step is the majority of all your traffic is going on your network. So that gives you a feel for where we think it goes, but we’re not there yet.

Doug Mitchelson — Credit Suisse — Analyst

Great. Thanks so much.

Operator

Our next question comes from the line of Jonathan Chaplin with New Street. Please go ahead.

Jonathan Chaplin — New Street — Analyst

Thank you very much. Couple more questions on the 800 megahertz auction. So based on the value ascribed to the the option, it looks like the underlying spectrum is being valued at about $5.3 billion. Does that value assume like a certain exercise of the option or is it still probability-weighted. And if — If not, what would the value of the spectrum be if it was sudden[Phonetics]?

Paul Orban — Chief Financial Officer

This is Paul. Yeah, it’s still probability of weighted at this point in time. And the only change that you saw quarter-over quarter from year end and the valuation is really just the time value — time value of money impact.

Jonathan Chaplin — New Street — Analyst

Got it. And how much.

Paul Orban — Chief Financial Officer

We don’t give we don’t. We’re not given the amount nine probability. Correct.

Jonathan Chaplin — New Street — Analyst

Right. Can you give us what the sort of the reference transaction or the reference value that establishes — establishing that $5.3 billion value?

Charlie Ergen — Chairman

If we look at other options and so forth out there, we won’t give you the net the number specifically, but that data is out there and I’m sure you know who you can compare it to.

Jonathan Chaplin — New Street — Analyst

Got it, okay. So it would be something like that. T-Mobile just from Colombia capital or something like that for 600 megahertz that you might look at?

Charlie Ergen — Chairman

It will be something like that.

Jonathan Chaplin — New Street — Analyst

Got it and then the. Can you tell us the exercise date has been extended till, is that July 1st or is it September 1st? And do you still have to notify the FCC of your intention by June 1st.

Charlie Ergen — Chairman

It’s little complicated, because they have — they haven’t rolled on that, actually haven’t rolled-out an extension requests. But the exercise they design as I understand is July 1st.

Jonathan Chaplin — New Street — Analyst

July 1st, Got it,

Charlie Ergen — Chairman

We’re still we’re still waiting on the formal. Really.

Jonathan Chaplin — New Street — Analyst

And then one last one on the top gigahertz. It looks like there is a prospect that you might use that for fixed wireless broadband. Given that you can’t use it for mobile use. Can you give us some more context for your thoughts around that?

Charlie Ergen — Chairman

Well I mean. I think for us, mobility is really the key use and we were disappointed that we weren’t able — we believe we could have — We believe that we could have used it on an interferon basis with mobility. But look, the engineers are good, the FCC and I respect their decision, because they had they had enough information, they did their own analysis. So. I think, the FCC is opening comment on the 1207[Phonetic] to 1375 frequency and, again, given that we paid at auction, given that we believe mobility is imperative for us to compete. That would be,– you can imagine that that would be another place to go, but, we’ll just have to wait-and-see.

Jonathan Chaplin — New Street — Analyst

Got it, thanks very much guys. I appreciate it.

Operator

Our next question comes from the line of Kannan Venkateshwar with Barclays. Please go ahead.

Kannan Venkateshwar — Barclays — Analyst

Thank you. [Technical Issues] in the 600 megahertz spectrum. I just wanted to clarify something. I think last week you guys or maybe the week before there was an application to cancel some of these licenses. I just wanted to get some clarity on why cancel instead of just waiting on the license period? And then secondly, when we think about, the 60 day extension for the 800 megahertz spectrum, is that based on some concrete discussions you may be having with maybe potential partners in terms of funding it or is this just an extension of an option to see what else is out there that you can go out and explore. That would be helpful. And I have one follow-up on funding.

Charlie Ergen — Chairman

Yeah, on 800 megahertz. I just don’t want — I just don’t want to comment on strategically where we are there, other than we believe it — it’s expected that we need to compete and we think it’s valuable spectrum. obviously. On the cancellation of 600 megahertz, we made a mistake. So when you go to the FCC website, we have a lease with T-Mobile, first in markets and that lease we can’t — that lease was was up by the terms of the lease, so we went into cancel the lease and it inadvertently canceled the license. So that was a footfall to — on our part. But. Again, we believe that the FCC will have to put that unplug nodes, and — not cancel the lease and we don’t think that’s going to be an issue.

Kannan Venkateshwar — Barclays — Analyst

Okay, and does the strip any anything on the secured debts, because — I think 600 is the collateral for that bed frame.

Charlie Ergen — Chairman

The answer is no, because I believe the inadvertent mistake is going to get rectified.

Kannan Venkateshwar — Barclays — Analyst

Okay. All right. And then on funding. I just wanted to — I mean you have maturities, which obviously are the evidence need as you go into next year, but then if you really want to be aggressive competitively. I mean, this is a working capital heavy business, so you potentially need capital for that as well. And so when you think about the scale of funding, you might be — you might go-to-market for. How should we think about that as you go into next year? Is that mainly to fund the debt maturities, early in the year or might you be proactive and maybe accessed the market for more than just a maturity amount? Thanks.

Charlie Ergen — Chairman

I mean, look. I guess when we look at it, you have your — the first priority is to fund the debt. So and that’s and then we’ll be opportunistic beyond that and creative. I mean I think again. That’s why management gets paid is to make sure that that you can navigate when you have narrow windows, you can navigate those their windows and teams that are really good, they do really well when they have to focus and I’d. I’m quietly confident here that this team can navigate that, right. And we just have to focus on the things we control and do that we — They way I’d say it is. I think the market look market looks at us is half empty, maybe even 90% empty today, right, and. I think the truth is that the glasses more than half-full, right. This is a company has been we’re in our 40 year – 30 year, so we didn’t start yesterday. So we’ve had a lot of experience in similar[Phonetic] situations. It’s a seasoned management team, we’re not starting from scratch here. So we know-how to work together. We know how — we know how to assess risk, right. And we are asset-rich so, arguably, we have spent $34 billion for spectrum, that has gone up in value. We are building a World-class network, there is not another network in the world that is advanced as ours. So you’re — we — and again, I’ve traveled the world there is not another network as advanced as ours and it’s up and operating in 50 markets today and working so.

With cloud-based open RAN, with voiceover new radio, it just doesn’t exist. So we have some advantages in the architecture and I think one of the people — one thing is people not — and we’re getting we’re lucky which is nice, but you read a lot about AI. And an AI needs data debt and the most data-rich places in wireless network and if you want to access data, you better be in the cloud and you better have a very sophisticated network. That works more like an IT network, As we’ve built an IT network that kind of operates as a telco. Our competition is the telco that has to start operating like an IT network, that’s a tough transition for them, they’ll get there, It’s going to take them a decade to do it. But we’re already there. And so if you think, — if you think AI is going to have an impact, it’s not going to have — probably the first-place, you’re going to see is when you’re talking to your phone because just asking two questions. And now you have access to the world’s information, at your fingertips in a way that you didn’t have before, but you need a network to be able to do that. So we have a lot of things going on from a handful of prospective. That from a short-term Wall Street perspective, obviously, it’s probably not that relevant, but when you look at strategy and your long-term investor and your long-term that we think that — that we think we that the killer application ultimately will be AI and all that goes with it and we’re fortunate that we’ve designed the network to take advantage of that.

Kannan Venkateshwar — Barclays — Analyst

All right., Rachel, this is Tim. We’ll take one final analyst question here before we move on to the media.

Operator

Thank you. We will now take our final question from the analyst community. Members of the media on the call [Operator Instructions] We will begin the media portion of this call, following the answer to this final analyst question. And our question comes from Craig Moffett with SVB, MoffettNathanson. Please go ahead.

Craig Moffett — SVB MoffettNathanson’s — Analyst

Yeah. Hi, thank you. Charlie. I want to go back to something you said earlier in the Q&A session where you said the debt market looked like they were effectively closed in but you are asset-rich. Am I correct in reading that as you’re saying that you would be open to selling some portion of your spectrum as a way to finance your build, and if so, are you referring to the 800, if you exercise the option? Or are there other spectrum bands that you think of as less critical for your build that you would be willing to consider an offer for if they were available? And I mean. I guess I’m — I’m also thinking you could you could presumably use spectrum as as collateral. But it sounds like since you already have done that, you were saying that, that’s not sufficient in saying the debt markets are closed. Am I reading that correctly?

Charlie Ergen — Chairman

Well I mean. I think that our debt is trading for literally 20% returns, right. Yield to maturity, so. It doesn’t bode well for our ability to access in a competitive way to the debt markets, that could change, but that’s the way it is today. So when you look at — you look at the financing that we need to do for debt repayment and growing and growing our business. I think there is levers that we have, obviously, we have assets obviously anything is on the table when it comes to as a business person to get to where you — where you want to get to run a successful business. But we’re certainly not going to go into strategies and all the levers that we would pull there. I just think that it’s — that it’s. I think there’s more opportunity for us than people realize, let’s put that way.

Craig Moffett — SVB MoffettNathanson’s — Analyst

All right. Thank you.

Charlie Ergen — Chairman

Yes, thanks.

Operator

Thank you. We will now take questions from members of the media [Operator Instructions] When your line is open, please announce yourself by name and affiliation before asking your question. And we will take our question from the line of Scott Moritz with Bloomberg News. Please go ahead.

Scott Moritz — Bloomberg — Analyst

Yeah. Hi. It is Scott, Bloomberg News. Question about Boost. The — it sounds like that there’s have been ramping going on towards a possible launch, you have the iPhone coming in few months. Curious about the voices over net network and whether that’s the gating factor here, but is there a date on the calendar where you would call with a full launch?

John Swieringa — President and Chief Operating Officer, DISH Wireles

Hey, Scott, it’s John. So I’m going to interpret your question meeting Boost infinite, which would be our postpaid offering.

Scott Moritz — Bloomberg — Analyst

Yeah.

John Swieringa — President and Chief Operating Officer, DISH Wireles

So we’re bringing, iPhone to Boost infinite and we’ll be looking to ramp our marketing distribution opportunities in the back-half of the year. We certainly do have our own network on the way, we’ve got sort of more progress there with Boost Mobile, as of today, but we’re looking to launch devices and competitive products with Boost infinite on our own network as well.

Charlie Ergen — Chairman

And realize the iPhone is on Boost Mobile prepaid today. It’s just coming to postpaid.

Scott Moritz — Bloomberg — Analyst

And did you have a date for launch.

John Swieringa — President and Chief Operating Officer, DISH Wireles

We’re not going to share a date right now. I mean, obviously we are not wanting to broadcast our strategy to our competition, but you’ll see us significantly ramp activity in the back-half of the year.

Operator

Our next question comes from the line of Paul Kirby with TR daily. Please go ahead.

Paul Kirby — TR Daily — Analyst

Yeah, this is — Hi, thanks for taking my call. Charlie, you said you’re disappointed that the weather FCC plan to do in the 12.2 gigahertz. Are you surprised that they rejected the technical study submitted by the folks who wanted to open it up for 5G?

Charlie Ergen — Chairman

Well I mean. I think. Having been — having been on the inside to talk with staff and look at engineering studies. I think — look I think they did a thorough job, I trust then to do a thorough job obviously and SpaceX is doing a good job out there. So all I can do is congratulate them. We believe that. It could, we believe our studies were valid, but we didn’t — we didn’t we didn’t win on that one, so. It’s just disappointing, but it’s not — I don’t think — I don’t think. I would call it surprising. And again, we’ll look and see where they go with other frequencies and other things, but that that was something that — that and also getting — we haven’t been able to get the CBRS hyper — higher-power CBRS. for study that would be the other thing that we — that we’re little surprised that that hasn’t. Given that some of the commissioners have publicly talked about support for that to take a look at CBRS and trying to harmonize our C band in the United States because we’re we’re [Indecipherable] versus the rest of the world as a country, we have to compete, we’re the only country that got this low-band got awkward CBRS in the middle of a C band spectrum bands that standardize around the world. So it’s, I think it’s imperative that we take a look at that, get all of it — I don’t know what the decision should be in terms of if they should do something or nothing, but. I think it’s imperative that the the FCC take a look at that, so that we can make the best country pick — make the best decisions the country and we’ll continue to fight for that.

Paul Kirby — TR Daily — Analyst

And just to clarify, when you talked earlier. about the other, they’re looking at, you have to 1207 and 1375, right?

Charlie Ergen — Chairman

Yeah, 1207 to 1300, may, I just might have said it wrong but 12:07 to 1325 to their credit, the credit the FCC is looking at perhaps opening that band up again. That is a band that that that could be mobility. And given the 12 gig decision, and given the fact that we paid-for spectrum, 12 gig two-ways we paid-for DBS when acquired the spectrum from News Corp that was auctioned — and we also paid-for auction of the terrestrial rights. So the 12 gig, frequency by contrast SpaceX didn’t buy anything for spectrum, so it’s a funny sort of situation where you pay for spectrum and somebody who hasn’t paid-for it gets the priority. So, but they do a good job with it. So, the FCC has got to look at the big-picture and look at the public interest and again I think all I can say is, I respect their decision and it looks to me like they did a thorough analysis of that and we’re just disappointed but you — it is what it is.

Paul Kirby — TR Daily — Analyst

Okay, thank you.

Timothy Messner — Executive Vice President & General Counsel

All right, everyone. I think that’s it for today. Thanks for joining. Thanks for your questions and we’ll see you back here in roughly three months. [Operator Closing Remarks]